How to: small family fund

Looking for help from anyone out there running a small fund for family-friends.

Suppose you gather 10k from 5 members, and you turn the 50k into 100k over a period of a year,

- How much do you keep of the 50k profit?
- Do you charge this quarterly or yearly?
- How do guarantee that they will be ok with this?
- Do you charge a fixed fee? If so, how much and on what basis? How frequently?
- I understand Interactive Brokers has some infrastructure aimed at doing this, anyone out there using it? How is it like?

Looking for help from anyone out there running a small fund for family-friends.

Suppose you gather 10k from 5 members, and you turn the 50k into 100k over a period of a year

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Suppose you turn the 50K into $5K over a period of a year? What if you go under and owe money to the brokerage on leverage trades (as you will not have much chance to "double" the money unless done so.)

In other words, trading family money is a really bad idea, and not really fair to them. Almost all traders lose their money when trading. And $50K is chicken feed, which says you really have not proven you can yet trade longterm, successfully.

Your should risk your own money first and prove yourself for AT LEAST 2 years and a lot of trades, unless you want to create a large hole in the trust they have in you.

Suppose you turn the 50K into $5K over a period of a year? What if you go under and owe money to the brokerage on leverage trades (as you will not have much chance to "double" the money unless done so.)

In other words, trading family money is a really bad idea, and not really fair to them. Almost all traders lose their money when trading. And $50K is chicken feed, which says you really have not proven you can yet trade longterm, successfully.

Your should risk your own money first and prove yourself for AT LEAST 2 years and a lot of trades, unless you want to create a large hole in the trust they have in you.

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Or that too... I was assuming he was well aware of everything, and how it could be made... just make sure that whoever puts money with you is well aware of the risks they are incurring.

Well, I've been paper day trading stocks for about 6 months now. I spend about an hour before the market opens scanning the news, upgrades, downgrades, earnings if any. I identify 4 shorts and 4 longs, and then I wait for volume to confirm price direction by crossing its own 200SMA. After that I pretty much use manual trend lines to follow the trade. I place stop losses as soon as I enter trades, usually above-below the previous high-low. This past week I had a 44% win rate, but my average win was 269$ and the average loss was 112$. Total profit after commissions was $2,575 from a paper balance of $14,000, so about an 18% profit.

But I wasn't asking whether I can trade or not, I was asking about process to set up a small fund, so let's get back on topic please!

I have more questions,

1) Do you open a brokerage account with all the parties signing under it? Would they have access to the account?
2) How frequent do you report results? Weekly?
3) Is there a way to automate the calculation-payment of the bonus of the manager? Are there brokerage accounts that do this?

1) Do you open a brokerage account with all the parties signing under it? Would they have access to the account?
2) How frequent do you report results? Weekly?
3) Is there a way to automate the calculation-payment of the bonus of the manager? Are there brokerage accounts that do this?

Thanks!
J

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6 months. So you started shortly after the March lows? Please take this as intended -- but virtually everyone has made money, quite a bit in the time frame described.

Next point -- paper trading is not indicative of real world results.

Next -- I trade money for multiple friends/family members. I take no money from them. Why? I merely trade for them the same securities I trade in my own account. I have traded full time for 14 years so throwing in an extra trade or two for them is easy and a no brainer.

Last, it sounds like you're new to this with asking about when to report results, whether they should have access to accounts, etc. I'd HIGHLY recommend that you trade some of you own money -- REAL $$$ -- before asking family for $$$.

ABSOLUTELY IRRELEVANT. That is what I said above, this person has no business taking his family's money. Has established himself as a paper trader. has no clue about the emotions of real money at risk, or the fact that paper trading is step 1 in a long chain of things needed to trade well. This revelation is astounding, and shows it is even worse than originally suspected.

But I wasn't asking whether I can trade or not, I was asking about process to set up a small fund, so let's get back on topic please!

You do not seem to realize this last statement IS the question. You have NO business risking family or friend's funds, because none of this shows any evidence other than you are going to head for disaster... Can anyone who trades wake this guy up????

I agree. I've traded money for others for a good few years and I will not touch family money. A few have asked and I have declined. If you lose family money you can throw those relationships out the window, no matter that they have stated they'd be ok with it. It's a bad, <b>bad</b> idea.

Quote from TraderZones:

...In other words, trading family money is a really bad idea, and not really fair to them. Almost all traders lose their money when trading. And $50K is chicken feed, which says you really have not proven you can yet trade longterm, successfully...